As most of the stock exchanges will remain shut on Tuesday and majority of them will close early on Monday, one may expect thin trading in the first part of the week. However, markets will get back in full swing later on with some key readings scheduled for Friday. CPI reading will provide update on the European economy while the US datastream will include crucial report from the labour market. Data on the oil inventories rounds up the calendar.
NFP report from the US (Friday, 1:30 pm GMT)
At the very beginning of the new year investors will be served crucial report from the US economy. As the Federal Reserve took a more cautionary stance regarding path of the rate hikes in 2019 investors will watch incoming datastream more carefully to see whether the World’s biggest economy is ready for another rise in the borrowing costs. Data on wages will be especially closely watched as it may hint at mounting inflationary pressures and a solid reading may encourage Fed members to deliver one more rate hike. Markets expected a minor deceleration in the wage growth measures. Affected markets: TNOTE, GOLD.
CPI inflation from EMU (Friday, 10:00 am GMT)
European Central Bank decided to end the net asset purchase program in 2018 but will keep reinvesting proceeds from maturing securities as it thinks significant stimulus is still needed. Nevertheless, lacklustre price growth in the euro area will be certainly a drag on the long-desired hawkish shift in Europe. Various institutions project that prices will rise during the next year but they also name protectionism as the main cause of it. Indeed, further escalation of the trade conflict may lead to higher prices but it will also limit economic expansion and raising interest rates in such environment may be disastrous. Affected markets: EURUSD, DE30.
Data from the oil market (Friday, 4:00 pm GMT)
As several US departments will remain shut at the beginning of the week due to New Year holiday, data on oil inventories will be released with a two-day lag. Despite OPEC agreeing on production cut moods on the oil market remain bearish. This is mainly due to concerns that cuts agreed on by cartel will not be enough to offset robust US output. Situation may be made more clear soon as the Russian Energy Minister announced OPEC+ will release a statement in January, in which the cartel will outline how it plans to implement the agreement on production cuts. As no specific date was named, oil traders may want to focus on regular inventories data that may turn to be a trigger for short-term price swings. Affected markets: OIL, OIL.WTI.
